Midwest plan hangs on 1973 agreement

The state government has questioned the validity of a 34-year old state agreement that Midwest Corporation Ltd and Yilgarn Infrastructure Ltd are relying on for a $2 billion railway and port project in the Mid West region.

Planning and Infrastructure Minister Alannah MacTiernan said the old agreement had not been under active consideration by the government.

“It would certainly be our preference to not rely on that,” Ms MacTiernan said.

“There are still a number of obstacles to it being used.”

She noted, for instance, that the agreement referred to government railways, which had since been privatised.

Midwest and Yilgarn announced earlier this month that they plan to jointly develop a new port at Oakajee and a railway to iron ore mines in the hinterland.

Midwest said its deal with Yilgarn envisaged implementation of its existing state agreement with the Western Australian government.

The Iron Ore (Murchison) Agreement Authorisation Act 1973 was originally negotiated by Northern Mining then passed to Kingstream Steel and now Midwest.

The head of the state government’s Oakajee task force, Ian Williams, has also questioned the agreement.

“It’s been generally held that that agreement is obsolete,” Mr Williams told a Lloyd’s List DCN transport conference.

“It’s a question of: is it appropriate to be used?

“They claim it is, I don’t know.”

Ms MacTiernan said her preference was for the industry to reach an agreed position, which would allow the government to start negotiating a new state agreement.

Midwest had previously been working with Murchison Metals Ltd, which is continuing to develop its own infrastructure plan even though Midwest has signed up for Yilgarn’s competing proposal.

Ms MacTiernan said she was very disappointed, adding that the industry needed to reach a decision soon.

“We need a fix in the next couple of months,” she said.

If the industry could not reach an agreed position, the government would consider changes to what she called the “antique” state agreement.

A third option was to open up the process to a competitive process, which would cause further delays.

Mr Williams said the region needed a truly independent infrastructure provider, which meant there should be minimal cross shareholdings with the mining companies.

The government had considered negotiating a new state agreement with the mining companies through a joint venture arrangement, on the premise that they would sell down their ownership interest.

“That became a bit of a stumbling block and hasn’t really been resolved yet,” he said.